Hot Topics:

Business

Turning away from bonuses

By Amy Goldstein and Carol D. Leonnig The Washington Post

Posted:
03/19/2009 12:30:00 AM MDT

Updated:
03/19/2009 06:00:11 AM MDT

AIG chief executive Edward Liddy looks at CodePink protesters as he arrives to testify before a House subcommittee on Capitol Hill on Wednesday. Liddy told lawmakers that he, too, was angry about the $165 million in bonuses doled out to company executives.
(Susan Walsh, The Associated Press)

WASHINGTON — The chief executive of American International Group, trying to defuse the wrath of the public and politicians over millions of dollars in bonuses, told Congress Wednesday that he had asked a few hundred employees of the beleaguered insurance company to give back at least half the extra pay.

Edward Liddy, brought in last fall to lead the giant firm the government had rescued from the brink of insolvency, arrived on Capitol Hill with empathy for the outrage that has erupted over the bonuses — but not complete surrender.

"We've heard the American people loudly and clearly these past few days," Liddy told an irate House subcommittee, saying he found the bonuses "distasteful.

Extras

" But he defended the rationale behind the payments, totaling $165 million to AIG's most troubled Financial Products division, reiterating that they were intended to prevent the company from collapsing by deterring vital employees from leaving the firm.

He said "some" of the Financial Projects employees already had returned their bonuses but did not specify how many. Asked by Rep. Barney Frank, D-Mass., to provide the names of those who have kept the money, Liddy balked, saying he feared for their safety in light of written threats.

Liddy said he asked Financial Products employees who received at least $100,000 in bonuses to relinquish some of the money.

Advertisement

But from the testy mood in the House hearing room, to the White House and the New York attorney general's office, it was plain that AIG's strategy was not containing the crisis.

The House scheduled a vote today on a measure that would impose an income tax of 90 percent on bonuses that AIG employees received this year. And the Senate Finance Committee is preparing separate legislation that would capture 90 percent of the bonus money through excise and income taxes.

Attorney General Eric Holder announced Wednesday that the Justice and Treasury departments had begun jointly exploring "tools" to recover the bonuses.

David Axelrod, senior adviser to President Barack Obama, stopped short of saying that the White House had directed Liddy to request employees give back bonus money. But he said that Treasury Secretary Timothy Geithner in conversations with Liddy in recent days had "made clear that he would like to see as many of the bonuses recovered as possible."

In other developments:

• Sen. Chris Dodd, D-Conn., acknowledged that his staff agreed to dilute the executive-pay provision in last month's stimulus package that would have applied retroactively to recipients of federal aid.

"I did so at the request of administration officials, who gave us no indication that this was in any way related to AIG," Dodd said.

He did not specify the officials.

• Federal Reserve officials knew for months about the bonuses but failed to tell the Obama administration, AIG officials said. The Treasury and White House didn't learn of the matter from Fed officials until just days before the payments were due.

• According to documents and interviews, the work of defusing the most dangerous bets placed by AIG was largely concluded by December, long before the company gave bonuses to employees it said it needed to retain to avoid a financial meltdown. Two Financial Products executives said the focus has shifted to resolving a vast but less risky portfolio of bets on more straightforward financial instruments.

Missy Franklin, Jenny Simpson, Adeline Gray and three other Colorado women could be big players at the 2016 Rio OlympicsWhen people ask Missy Franklin for her thoughts about the Summer Olympics that will begin a year from Wednesday in Rio de Janeiro, she hangs a warning label on her answer.